Armstrong definately blew on the climb and had to be paced to the finish, the Astana boys with him could have gone up much faster. I suspiciously thought he will drop down in the GC then try and hit a breakaway later on in the tour and hope to be allowed to go once he is not a GC threat. Proves his point and gets him some exposure. I do not see him making up time in a timetrial to be honest, he has lost it as a potential winner already. Look for a breakaway effort after the first TT.
How long will he stay in - probably as long as he feels what he is doing is benefitting his TdF bid. If he treats it as training and ignores the GC of the Giro then so long as its beneficial he will remain. Once he can get better training from a dedicated solo training plan he will drop out and blame the collarbone.
Regarding Levi - he looked comfortable enough yesterday and never lost contact. Also never took the front. Astana do not want to be defending the jersey yet, especially if they are carrying LA for future glory in the TdF. Heck LA may be deluded about his ability, but for the others, even if they know it, if LA is paying their wages come June then they will be hoping he remembers who stuck with him on the Giro!